No Double Pricing, Auto Insurers Told

No Double Pricing, Auto Insurers Told

Insurance Commissioner Robert Googins Tuesday banned a practice by some auto insurers that could unfairly cost some consumers more than others for the same coverage.

Insurers must not maintain two difference prices for the same policy and customer without justification, Googins said.

Some companies offer their agents different pricing tracks, so if a consumer balks at a quoted price, the agent can offer a lower price on the same policy. But many consumers may not know there are two different prices and that they may not be getting the best deal, regulators say.

Googins issued a bulletin Tuesday to all property-casualty insurers doing business here, warning that such practices will be deemed illegal under state law. The practices are not widespread in Connecticut, however.

Regulators say the only insurer they know of in Connecticut whose pricing practices were questionable was ITT Hartford Insurance Group. The company has said it is changing its pricing programs, which it conceded might be "confusing for policyholders."

Googins noted it is legal for an insurer to charge different premiums based on customers' potential risk. Drivers with the cleanest driving records, for instance, may qualify for a company's lowest prices, while the same coverage will cost more for drivers who have had accidents.

Insurers must clearly spell out what characteristics qualify someone for the different rates, Googins said.

Also, under certain circumstances, different prices are allowed to reflect who is going to serve the customer after a policy is sold.

Some insurers, for example, lower prices on policies whose buyers are served through a central customer service center. The companies believe they can handle customer service more efficiently through the centers. Insurers can offer a lower price by lowering the commission of the agent who won't be servicing a policy.

When agents are allowed to choose whether or not they're going

to service a policy, they are supposed to inform customers about the potential difference in prices. A customer must acknowledge in writing that he or she wants the higher-priced coverage, Googins's bulletin says.

The Department of Insurance began looking into dual-priced auto insurance programs after several companies sought approval for such practices, Googins said.

The bulletin follows a September public hearing on practices that may be unfair to consumers. The hearing drew more than 35 people but little testimony